"State and local authorities are hedging and issuing debt in order to deal with the financial crisis,” José Manuel Arteaga reported in an August 13, 2009 article in El Universal, a Mexican daily. Since the 1997 Legal Reform of Article 9 of the National Fiscal Coordination Law (NFCL), which allowed municipalities the right to take out commercial bank credits, there was a new emphasis on public debt in Mexico. But following the financial crisis, President Calderon sent in a “bail-in” to the largest development bank, Banobras of more than $1,800 million pesos. Since then, private capital investments have decreased and a number of firms have collapsed. The proposed paper seeks to study how and why municipalities in Mexico acquire public debt with a particular emphasis on analyzing the circumstances and conditions under which municipalities should assume indebtedness. More specifically, the paper will analyze when and why municipalities take on debt; the best offers (in terms of tenors and interest rates, public or private services); the purpose of the loans (investments in infrastructure, economic development, covering operating expenses); and the rates of repayment and/or default. The main objective is to better understand the borrowing patters of Mexican cities and whether they acquire public or private debt.